Rating Change #8
Computer Sciences Corporation (CSC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.
Highlights from the ratings report include:
- COMPUTER SCIENCES CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, COMPUTER SCIENCES CORP reported lower earnings of $4.50 versus $5.27 in the prior year. For the next year, the market is expecting a contraction of 1.1% in earnings ($4.45 versus $4.50).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the IT Services industry. The net income has significantly decreased by 1663.6% when compared to the same quarter one year ago, falling from $184.00 million to -$2,877.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, COMPUTER SCIENCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for COMPUTER SCIENCES CORP is rather low; currently it is at 18.90%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -72.40% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to $6.00 million or 98.50% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Computer Sciences Corporation provides information technology (IT) and professional services to governments and commercial enterprises. The company has a P/E ratio of 6.9, above the average computer software & services industry P/E ratio of 6.6 and below the S&P 500 P/E ratio of 17.7. Computer Sciences has a market cap of $5.1 billion and is part of the technology sector and computer software & services industry. Shares are down 43.8% year to date as of the close of trading on Thursday.You can view the full Computer Sciences Ratings Report or get investment ideas from our investment research center.